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News - 3 June 2014

UK house prices may be starting to slow down

 UK's largest building society, the Nationwide, say there are signs that activity in the housing market may be "starting to moderate".

 
The annual rise in house prices edged up from 10.9% to 11.1%, the fastest increase in seven years; however, prices in May rose by 0.7%, compared with a 1.2% rise in April.
 
The average UK property price is now £186,512, the building society said.
 
Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“The slowdown could partly be the result of new mortgage lending rules, which officially started in April. The government's Help to Buy mortgage guarantee scheme seemed to have played little part in house price growth; the number of mortgage approvals in April was down 17% from January.”
 
The May slowdown could be linked to the introduction of tougher questions in the mortgage application process. The new measures require mortgage lenders to test buyers more strictly about whether they can afford mortgage repayments, including under the scenario of rising interest rates.
 
Despite more stringent mortgage lending rules, demand from first-time buyers was still there with 48% of house purchase activity in March coming from them.
 
Nevertheless, the government's Help to Buy scheme, which is designed to ease first-time buyers into the housing market, was not a major factor in price rises, Nationwide said. In the first quarter of the year, Help to Buy mortgages accounted for 9% of total mortgage completions.
Critics have voiced concerns that the government mortgage guarantee could contribute to a UK housing bubble.
 
However, last week Graham Beale, the chief executive of Nationwide, said that the housing market could be facing a "natural correction" and warned that there was a "slowing down in the market place", particularly in London.
 
If you need any help and advice for your business on the implications of central and local Government Funding initiatives and the construction industry, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help
 
ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900 E-mail: abds@netaccountants.net
 
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Clear and precise with advice
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In touch with issues that face our clients
Mindful of our client’s long term strategic goals
 
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